SBI PSU Fund is a thematic fund which made its debut in July 2010 and focuses on making equity/equity derivative as debt investments in various domestic public sector units (PSUs). This scheme featured an AUM (Assets Under Management) of Rs. 153.80 crore as of January 31, 2019 and has witnessed a significant correction in the past year. This recent correction has made it possible for investors to purchase units of this scheme at reasonable valuations and benefit from future growth of India’s PSU sector.

Key Statistics of SBI PSU Fund Performance*

Fund Performance

1 Year

3 Year

5 Year

Trailing Returns

-24.87%

3.81%

6.63%

Rolling Returns

-18.85%

8.87%

9.31%

Beta

0.776

0.879

1.033

Jensen’s Alpha

-24.56%

-6.74%

-4.13%

Sharpe Ratio

-1.941

-0.222

-0.109

Sortino Ratio

-0.541

-0.035

0.023

*Data Source – Pulse Labs. All data as of January 31, 2019.

Key Details of SBI PSU Fund

The following are some of the key details of the SBI PSU Fund as of January 31, 2019:

Inception Date – July 2010

AUM – Rs. 153.83 crore

Fund Manager – Mr. Richard D’souza (since August 2014)

Benchmark – S&P BSE PSU Index (TRI)

Expense Ratio – 2.26% (Direct)

Minimum Investment Requirement – Rs. 5,000

SBI PSU Fund Performance vs Benchmark*

Instrument

1 Year

3 Year

5 Year

SBI PSU Fund

-24.87%

3.81%

6.63%

Benchmark ( S&P BSE PSU Index – TRI)

-22.00%

6.70%

7.42%

*Data Source – Pulse Labs. All data as of January 31, 2019.

As of January 2019, SBI PSU Fund has generated returns of 3.81% and 6.63% over the last 3 year and 5 year periods respectively. The returns generated by this scheme are decent but have not succeeded in outperforming its benchmark returns. However, as this scheme from SBI Mutual Fund is invested in PSU companies which are backed by the government, this scheme holds the potential of generating good returns in the near future.

Asset Allocation of SBI PSU Fund

The following is the Asset Class-Wise Investment Breakup of SBI PSU Fund as of January 31, 2019:

Asset Class

Portfolio Allocation (% of total assets)

Large Cap Equities

52.90%

Mid Cap Equities

26.52%

Small Cap Equities

11.20%

Cash/Cash Equivalent Instruments/Short Term Debt

9.38%

*All data as of January 31, 2019.

SBI PSU Fund is a relatively aggressive thematic fund which has taken substantial mid and small cap exposure in its portfolio. That said, this SBI MF scheme has significant large cap holdings of around 52.90% too. These large cap investments refers to the holding in the top 100 listed companies in terms of market capitalisation which are less responsive to market turbulences. The scheme has invested around 26.52% of its assets in mid caps and around 11.20% in small caps. Both these two equity avenues are relatively more responsive to market volatilities but also feature the potential of generating high returns for investors.

The following is a list of the top sectors that the equity portion of the SBI PSU Fund is invested in as of January 31, 2019:

Investment Sector

% of Assets Allocated

Energy

40.17%

Financial Services

25.68%

Industrial Manufacturing

13.11%

Metals

4.88%

Construction

4.45%

*Data as of January 31, 2019.

SBI PSU Fund has maintained its aggressive stance in sector-wise allocation of its funds too. The scheme has given a higher weightage to cyclical sectors than defensive sectors. All the top 3 sector holdings of the scheme are consumption-driven – Energy (40.17%), Financial Services (25.68%) and Industrial Manufacturing (13.11%).

Top Individual Holdings of SBI PSU Fund

The following are the top 10 individual equity investments of the SBI PSU Fund:

Investment Name

Weight in Portfolio (%)

State Bank Of India

11.78%

Oil & Natural Gas Corporation

9.68%

Power Grid Corporation Of India

6.68%

NTPC

6.54%

Indraprastha Gas

5.53%

National Aluminium Company

4.88%

Rites

4.45%

Bank Of Baroda

4.28%

Indian Oil Corporation

4.00%

Punjab National Bank

3.98%

*Data as of January 31, 2019.

Investment Facts of SBI PSU Fund

SBI PSU Fund is a thematic scheme from SBI Mutual Fund with a proven track record spanning close to a decade.

The scheme has given average returns over the medium to longer term but features the potential of performing better in the future with better governance of PSUs in India.

The scheme follows a balanced approach in the allocation of its assets across market capitalisations. As of January 2019, over 50% of its assets are in large cap equities/equity derivatives with another 37% of its assets are invested in mid and small cap companies.

The scheme featured cash/cash equivalent investments equalling around 10% of its total assets as of January 2019, which may allow it to add PSU investments at comparatively reasonable valuations in case of future market corrections.

It is a suitable thematic scheme for investors who are seeking a thematic investment capable of preserving wealth and providing moderate to potentially high returns in the long term.